The importance of Foreign Exchange Transaction Forms
Thailand, the Land of Smiles, has become very popular among foreigners as their location of choice for the purchase of property outside their home country. More and more foreigners are choosing to buy property in Thailand for various reasons, which vary from the acquisition of an exotic holiday home to pure investment and the realization of sizeable appreciation and return on investment, or even both.
After having chosen the property of your dreams, your seller might ask you to sign a reservation under which you most likely be required to make a first down payment, often called Reservation Fee which will be followed by further payments under the main agreements to be entered into. In this context highest attention should be paid to the correct application and issuance of relevant documentation by and through the bank of your seller evidencing your money transfer of foreign currency equivalent to the respective Thai Baht amounts payable as agreed with your counterpart under the aforementioned documentation.
In the event you have decided to buy a condominium unit in Thailand, then correct application and accurate issuance of so called Foreign Exchange Transaction Forms (also known under FET or Thor Thor 3) is often required, if money transfer of at least USD 20,000 or other relevant documentation if remittance of an amount less than USD 20,000 is made, into a Thai Baht bank account in Thailand.
Such FET (or other relevant documentation) must be provided to the land department in the event of condominium unit purchase by a foreign buyer who has chosen the option of remittance of foreign funds into Thailand equalling the unit´s purchase price as instrument to qualify himself as freehold buyer in a condominium project.
The FET (or other relevant documentation) can also be used as evidence for actual payment of the purchase price if any kind of interest shall be registered against land with the relevant authorities or as evidence as to the original source of monies to be later repatriated out of Thailand in case of re-sale. Additionally, all taxes and regulatory requirements should be considered to ensure that all funds occurring from a re-sale could be taken out of Thailand and transferred back to country of origin.
The money receiving bank will supply the relevant and accurate FET or other document as described above always provided that the buyer as money transferor clearly disclosed and designated purpose of the transfer of funds into Thailand and his full name under the payment instructions when instructing his transferring bank (e.g. Condominium Unit purchase by Mr. XYZ).
This article is written by Michael Greth, Consultant of the Phuket based law firm International Law Office Patong Beach Co., Ltd.,
michael@ilo-phuket.com
+66-(0) 76-222 191-5
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